Determine the ratio of fixed assets to long-term liabilities

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Assignment

Six Measures of Liquidity or Profitability

The following data were taken from the financial statements of Whiting Enterprises Inc. for the current fiscal year. Assume that long-term investments totaled $1,000,000 for the past two years and that total assets were $14,400,000 at the beginning of the year.

Property, plant, and equipment (net) Liabilities:

 

 

$7,000,000

Current liabilities

 

$200,000

 

Mortgage note payable, 8%, ten-year note issued two years ago

 

5,000,000

 

Total liabilities

 

 

$ 5,200,000

Stockholders' equity:

 

 

 

Preferred S2 stock, 520 par (no change during year)

 

 

$ 3,000,000

Common stock, $2 par (no change during year)

 

 

500,000

Retained earnings:

 

 

 

Balance, beginning of year

$6,525,000

 

 

Net income

725,000

$7,250,000

 

Preferred dividends

$300,000

 

 

Common dividends

50,000

350,000

 

Balance, end of year

 

 

6,900,000

Total stockholders' equity

 

 

$10,400,000

Net sales

 

 

$36,400,000

Interest expense

 

 

$400,000

Determine the following: (a) ratio of fixed assets to long-term liabilities, (b) ratio of liabilities to stockholders' equity, (c) ratio of net sales to assets, (d) rate earned on total assets, (e) rate earned on stockholders' equity, and (f) rate earned on common stockholders' equity. Round to one decimal place.

a.

Ratio of fixed assets to long-term liabilities

1.4

b.

Ratio of liabilities to stockholders' equity

.5

c.

Ratio of net sales to assets

2.6

d.

Rate earned on total assets

7.5%

e.

Rate earned on stockholders' equity

7.1%

f.

Rate earned on common stockholders' equity

42.5%

Reference no: EM131785679

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